Office of the Historian

394. Letter From the Director of the Office of Management and Budget (Miller) to the Under Secretary of State for Economic and Agricultural Affairs (Wallis)1

Washington, April 7, 1988
Dear Allen:

Thank you for the information regarding the second International Natural Rubber Agreement (INRA II).2 As you know, funding for INRA II was not included in the President’s Budget request for FY 1989 due to the tight ceilings on the International Affairs function imposed by the Bipartisan Budget Agreement. While it is customary for OMB to take the heat from the general public for budget cuts, I hope you understand that the exclusion of INRA II funds from the budget was essentially a State Department decision. We passed back to the Department a budget allowance in excess of $15 billion for the International Affairs programs under its control, and we would not have objected if a portion of this amount had been allocated to INRA II.

Because of the concern we have over the agreement, my staff is working closely with the interagency group, including the State Department, in exploring options which would enable us to participate in INRA II. Foremost among these options is the transfer of existing assets under INRA I to INRA II. The U.S. share of rubber stocks and cash in INRA I is valued at approximately $50 million. Prior to the Bipartisan Budget Agreement, the interagency group agreed that the Administration would seek authorizing and appropriating legislation to enable us to transfer these assets from INRA I to INRA II.

We have reconsidered this position in light of evidence that this may not be necessary. We are planning to present the arguments for not scoring the transfer to CBO shortly. Frankly, we will have to abide by their decision. Otherwise, the Administration would risk being accused of violating the Bipartisan Budget Agreement. If CBO does not agree [Page 956] that the transfer need not be scored, we will have to consider finding offsets within function 150 to fund INRA II.

I appreciate your interest in this matter and I truly hope that an acceptable solution will be found in the near future.3

Sincerely yours,

James C. Miller III4
  1. Source: Department of State, Executive Secretariat, S/S Files, 1988–1989 Official Office Files for (E) Economic Affairs Allen Wallis, Lot 89D154: untitled folder. No classification marking. A stamped notation at the top of the memorandum reads: “Received Under Secretary’s Office Apr 18 1988.” A handwritten note from Martin Bailey to Wallis affixed to the front of the memorandum reads: “AW, Phil du Sault at OMB has talked to the CBO staff and is waiting for a reply on whether the buffer stock transfer requires an appropriation. OMB was more helpful than expected on this matter. Martin.”↩
  2. Wallis forwarded correspondence on the INRA–II issue to Miller under a March 18 covering memorandum. (Department of State, Executive Secretariat, S/S Files, 1988–1989 Official Office Files for (E) Economic Affairs Allen Wallis, Lot 89D154: Action Memoranda March 1988)↩
  3. In telegram 186684 to Tokyo and Moscow, June 17, the Department explained that due to budget constraints it was not possible to include funding for INRA II in the President’s budget for FY 1989. Executive branch agencies “have sought to overcome this difficulty through the continued use of funds appropriated and expended to support our obligations to INRA I.” Significant issues arose with this proposal, but the Executive branch determined the proposal was viable and the Department had just been informed that the Congressional Budget Office had no objections to the proposal. “This concurrence means that the basic funding hurdle has been overcome,” the Department concluded. (Department of State, Central Foreign Policy File, Electronic Telegrams, D880496–0668) On September 7, by a vote of 97 to 0, the Senate passed a resolution giving affirmative advice and consent to the President’s proposal to ratify the INRA 1987. On November 9, the U.S. deposited its instrument of ratification for the INRA 1987 with the UN Secretary General, completing U.S. action required for full membership in the agreement.↩
  4. Miller signed “Jim” above his typed signature. He wrote at the bottom of the memorandum: “P.S. Any other ideas?”↩